Fonterra expects that devaluation of the yuan to create demand for dairy products

The New Zealand co-operative Fonterra, the world's largest dairy exporter, said today that the effort of China to devalue the yuan could boost Chinese demand for dairy products from New Zealand and, eventually, give a reason for a recovery from the current low prices of milk.
The CEO of Fonterra, Theo Spierings, said the weakening of the Chinese currency might make China's exports more competitive, which in turn can boost the country's economy and, eventually, help in the recovery of its imports of dairy products.
"[The currency devaluation] leads to job protection and protection of consumer purchasing power, so these are good measures of short-term," attested Spierings, in an interview on Tuesday. The New Zealand exports about 90% of the milk which produces, and much of that amount goes to China.
The recent devaluation of the yuan promoted a sharp drop in other currencies, including the New Zealand dollar, or "kiwi, which had been rising amid expectations that prices of milk were to appreciate. According to Murray Hindley, trade Manager outside of the ANZ Bank, the kiwi is "moving slightly upwards compared with the auction tonight". On the last trading of the currency, the New Zealand dollar was at $ 0,6595 compared with $ 0,6547 on Monday.
A high milk prices can boost the kiwi, as the dairy products account for about 25% of exports from New Zealand.
It is believed that milk prices will rise between 10% and 15% at the auction which will take place today on online platform Global Dairy Trade after ten consecutive falls. Since the last auction, day 4, when prices fell to the lowest in 13 years, Fonterra has reduced substantially the supply of powdered milk offered on the platform.
The Chairman of Fonterra said it would interpret any high milk prices at the auction today more as a correction of a beginning of a recovery. "Milk prices are unsustainably low and below the minimum," said Spierings. "They may be rising, but it is more a correction than a demonstration of strong demand in sales channels," he said.
The Executive indicated that any sustained recovery would have to be linked to an increase in demand from China, where the slower economic growth has hit the demand for milk and other imports.